The Standing Committee on Public Accounts was briefed by the Special Investigating Unit (SIU) on the progress made in their investigations into financial irregularities at the South African Broadcasting Corporation. It was told that the investigations had produced sufficient evidence to initiate or join in civil litigation instituted by the SABC in various court matters to the value of just over R560 million.
The SIU had found evidence that indicated irregularities in the awarding of contracts to eight suppliers, and also that there were irregularities in the awarding of a success fee to former SABC chief operating officer (COO), Mr Hlaudi Motsoeneng, as well as various appointments and salary increases awarded by him. Court-ready evidence had been gathered and compiled in respect of 45 matters. To date there had been 11 criminal referrals and 24 disciplinary referrals. The SIU had initiated interventions such as a special tribunal, a memorandum of agreement (MOU) with the National Prosecuting Authority (NPA), and a regular follow up and update on referred disciplinary actions that expedited progress. The Committee was provided with details of the status of the various cases in progress.
The SIU said that in the second phase of its investigations, matters being investigated included The New Age (TNA), the SABC security tender, the irregular appointments of seven SABC officials, the irregular payment of bonuses such as the 13th cheques to senior managers, and the R31 million paid in bonuses to the 3 124 staff. Under irregular expenditure, a R5 million South African Revenue Service (SARS) penalty, as well as the validity of a sample of tax clearance certificates, including conflicts of interest, were being investigated.
Members were generally appreciative of the progress that had been made so far, but cautioned against getting involved in pursuing civil litigation where the legal costs involved might outweigh the potential amount of money recovered.
Adv Andy Mothibi, Head: Special Investigating Unit (SIU), said the SIU was an independent statutory body that was accountable to Parliament and the President. Its primary mandate was to recover and prevent financial losses to the state brought about by acts of corruption, fraud and maladministration. The SIU also assisted departments with systemic improvements that improve service delivery. It had powers to subpoena, search, seize and interrogate witnesses under oath, and could take civil action to correct any wrongdoing it uncovered in its investigations. Where criminal conduct was uncovered, it would bring the matter to the attention of its partners, the Hawks, in the South African Police Service (SAPS), as well as the National Prosecuting Authority (NPA). It also worked closely with the Asset Forfeiture Unit (AFU) in the NPA, where its powers were more appropriate or effective in recovering the proceeds of crime.
This served as the background to the status of the current investigation by the SIU at the South African Broadcasting Corporation (SABC). A phased approached had been adopted as a result of the significant amount of matters that had to be investigated. Proclamation No R29 of 2017 had been divided into Phase 1 and Phase 2, and the presentation summarised the outcomes of the 18 matters that the SIU had investigated.
He proceeded to provide an overview of the status of the SIU Phase 1 investigations at the SABC.
In a summary, it had found evidence that indicated were irregularities in the awarding of contracts to:
- Vision View Productions CC,
- SekelaXabiso CA Incorporated;
- Lornavision (Pty) Ltd;
- Lezaf Consulting;
- Gekkonomix (Pty) Ltd (trading as infonomix);
- Asanta Sana (Pty) Ltd;
- Foxton Communicating (Pty) Ltd; and
- Mott MacDonald (Pty) Ltd.
The evidence obtained for these cases also indicated that there were irregularities in the awarding of a success fee to former SABC chief operating officer (COO), Mr Hlaudi Motsoeneng, as well as various appointments and salary increases awarded by him.
The SIU also confirmed the Public Protector's findings that the following appointments of SABC staff/and or salary increases had been irregular: Ms Sully Motsweni, Ms Thobekile Khumalo and Ms Guga Duda. It had found no evidence to support allegations of irregularities regarding the appointment of other officials.
As a result of the investigation conducted by the SIU, court-ready evidence had been gathered and compiled in respect of 45 matters. This consisted of civil litigation that involved 10 matters, in some of which the SIU had made applications to join existing actions and applications, and the provision of evidence to the SABC to assist in defending one civil matter. To date there had been 11 criminal referrals and 24 disciplinary referrals.
The SIU had initiated interventions such as a special tribunal, a memorandum of agreement (MOU) with the NPA, and a regular follow up and update on referred disciplinary actions that expedited progress.
The investigation had produced evidence to initiate or join civil litigation instituted in the name of the SIU and the SABC in ten high court matters, to the value of just over R560 million.
The SUI had also provided evidence to defend the Asanta Sana claim for R350 000 on 19 March 2018.
Adv Mothibi gave details of the civil litigation instituted by the SIU against Mr Motosoeneng. The matter related to the "success fee" paid to Mr Motosoeneng and losses/damages suffered as a result of irregular appointments and promotions he made during his tenure as COO of the public broadcaster. The SUI and SABC had jointly issued summons on 5 February 2018 in the High Court of Gauteng against Mr Motsoeneng in a civil case that consisted of two civil recovery claims. The summons was for the recovery of R11 508 549.12 in respect of the "success fee" that was paid, and secondly for the recovery of R10 235 453.20 for the irregular appointments, salary increments, suspensions and unlawful terminations of employment he had approved as COO. The civil litigation process was under way under case number 18/04253 .
Mr Motsoeneng had filed a plea, to which the SIU had excepted, following which his attorneys had withdrawn. The amended plea, due to be filed by his new attorneys, was still being awaited.
On 2 September 2019, Mr Motsoeneng had filed his counter claim, special plea, and plea to the particulars of claim. The SIU had until 20 September to file a replication and plea to the counter claim.
In matter 2, civil litigation had been implemented against SekelaXabiso CA Incorporated for the illegal manner in which a contract on audit services had been awarded. The civil recovery related to a matter that the SABC had referred to court for revision and setting aside of the irregularly awarded contract that had been entered into with SekelaXabiso. The notice of motion was issued on 22 December 2017 against SekelaXabiso in the High Court of South Africa, Guateng Local Division, Johannesburg. Case number 17/49870 referred. The review application had been dismissed and on 14 June 2019, the SIU had filed an application for leave to appeal and was awaiting a date.
The SIU found in respect of the other contracts that the reasons provided for deviations did not meet the requirements of the SABC supply chain management (SCM) policy in accordance with the Public Finance Management Act (PFMA) and section 217 of the Constitution.
The case against Vision View Productions CC related to a contract for a multi-purpose studio. It came to light that the SABC had irregularly procured the services of Vision View to construct a studio. The civil recovery related to a notice of motion filed on 28 April 2016 to have the contract between the SABC and Vision View set aside under case number 18/187. To date, the SABC had paid Vision View R34.4 million of the total contract, which amounts of over R52 million.
On 9 November 2018, the SIU had been successful and judgment was handed down by the High Court that set aside the contract between the two parties. The court also ordered the parties to refer the determination of just and equitable payment to Vision View to arbitration, a ruling which the SIU had since appealed. On 12 August 2019 Vision View filed an application to introduce new evidence, which the SIU had opposed.
Adv Mothibi referred to the civil case against James Aguma and Lornavision, for a contract to collect licence fees. The Lornavision contract had been set aside by the High Court, and on 11 May 2018 the SIU had submitted evidence to the SABC's attorneys (Werksmans) in support of a civil claim against Lornavision and Aguma to recover R62.7 million. The SABC had issued summons against both parties, ad the SIU had been given leave to join the proceedings.
Following an exception filed by Lornavision, the SIU and the SABC had recently filed a notice of intention to amend the particulars of the claim. Should Lornavision and Aguma not object to this, the amendments were due to be filed by 18 September. The SIU would explore all avenues to expedite this matter, including a request for an expedited hearing date to the Deputy Judge President once the heads of argument had been filed.
The case against Bessie Tugwana, former group executive for sports, was based on allegations that she was responsible for fruitless and wasteful expenditure in the award of the R50 million Vision View contract. Summons had been issued against Ms Tugwana and Mr Kubendhran Padayachee, former Acting Group Executive: Technology, but the summons could be served only on Ms Tugwana. She had subsequently filed an exception to the particulars of the claim, and the SIU was in the process of amending them. It was reported that Mr Padayachee was out of the country and that the summons could not be served, but the SIU was monitoring the situation and would advise as soon as he re-entered the country.
Gekkonomix (Pty) Ltd, trading as Infonomix had unlawfully been awarded a contract for the commercialisation of the SABC’s digital strategy, and was also paid upfront to render the service. In terms of the civil recovery, the SIU had applied to the court to declare the contract invalid and to claim damages/losses suffered by the SABC. The SABC had filed a notice to abide, and Infonomix had filed its notice of intention to oppose, but had failed to file the answering affidavit. The matter had been set down on the unopposed roll for 14 May 2010.
The case against Ms Audrey Raphela, former action chief financial officer (CFO), was for the unlawful authorisation and approval of Mr Moetseneng's personal legal fees, as well as upfront payments in respect of the appointment of Infonomix. The SIU had successfully sought an order to "freeze" the pension benefits of Ms Raphela. The pleadings had closed and the parties had had an exchange of discovery notices and documents. A pre-trial conference was scheduled to take place on 16 September 2019, whereafter the SIU would apply for a trial date.
Mr Mott MacDonald had been awarded a contract to revamp the lifts, and this award was deemed to be unlawful. In this case, the SABC brought a joint application based on findings from its investigation. All affidavits and heads of arguments had been filed in the joinder application. The matter was enrolled on the opposed roll for 21 October 2019.
The investigation had produced evidence that supported the 11 criminal referrals to the National Prosecuting Authority (NPA). Ms Sulley Miranda Motsweni, a former SABC group risk management executive, had been charged with fraud totaling R18 290. The referral date for this case had been 27 March 2018, with the trial commencing on 4 September 2019. It had subsequently been postponed to 30 January 2019.
In respect of the other 10 matters the SIU had investigated which involved private companies who contracted with the SABC, the combined value of the cases was approximately R267 million. The charges varied from theft, fraud and contravention of the Companies Act and the PFMA. The referrals were done in May, September and November of 2018, and May and July of 2019.
In relation to Mr Motsoeneng's "success fee," disciplinary and criminal referrals were being pursued, and evidence pointing towards criminal offences committed in respect of the payment of the success fee by former officials -- one was a current official and two were former board members -- had been referred to the NPA. Referral of evidence for potential disciplinary action against one official was in the process of being finalised.
The SIU had arranged with the NPA for a dedicated prosecutor to deal with all the SABC prosecutions.
The investigation had produced evidence to support the 24 disciplinary referrals arising out of the matters investigated. The evidence implicated 14 officials, all of whom had been charged. Seven of the matters had been finalised. The latest referral was on 6 May 2019 against a board member in respect of the SABC’s security contract.
The impact of the SIU’s disciplinary referrals had been the exiting of five SABC executives who were no longer working for the SABC, as two had been found guilty on disciplinary charges, one was dismissed and one resigned. Two had resigned in the face of SIU disciplinary referrals, where a contract had expired and was not renewed. Two SABC officials were dismissed, as they had been found guilty of the charges.
The criminal referral in respect of Ms Sully Motsweni was deemed as a case of fraud, and the evidence obtained indicated that the fraud had been committed in relation to eleven fraudulent claims that she and her relatives had benefited from, to the value of R45 184. The evidence obtained had been referred to the NPA on 5 April 2018. The SIU, working with the SAPS Commercial Crime Unit, had registered a criminal case at the Brixton Police Station on 15 May 2018 with SAPS Case Number CAS156/5/2018.
On 30 May 2018, Ms Motsweni had appeared in the Commercial Crime Court in Johannesburg on 11 counts of fraud. She was released on R5 000 bail and had several pending court dates ahead of her. The criminal trial commenced on 4 September 2019 and was postponed to 30 January 2010. The SIU was working closely with SAPS and the NPA, and would continue to monitor the progress on this case. The recovery of the R45 184 and other monies would be dealt with as part of the pending criminal processes.
The SIU had determined that the contract with Multichoice had ended in July 2018 and a new contract was entered into from 1 September for five years. The investigation indicated certain provisions of the expired contract to have been unlawful by virtue of having been in contravention of the government's prevailing Broadcasting Digital Migration Policy/Encryption Policy at the time, as well as against certain provisions of the Broadcasting Act, No 4 of 1999. However, this was of no significance in terms of any viable legal remedies, not only as the contract had already expired, but also as having the contract declared void and offering restitution would serve no meaningful purpose.
The evidence obtained also indicated that SABC signatories to the agreements were, as at the date of signing thereof, not duly authorised to sign it, and that a false or incorrect resolution had been compiled. These aspects and the role of specific individuals concerned were still under investigation, and criminal/disciplinary referrals were anticipated.
In respect of the financial viability of the expired agreement, the evidence obtained indicated that it was financially viable at the stage of entering into the contract. In addition, subsequent events that caused the agreement to result in significant losses to the SABC were still under investigation.
A new contract between the SABC and Multichoice had been entered into with effect from 1 September 2018 for a period of five years. The investigation of this contract fells outside the scope of the current proclamation, and the avoidance obtained justified an application for a new proclamation to investigate this contract.
In respect of the financial viabiility of the expired agreemnt, the evidence obtained indicated that it had been financially viable at the stage of entering into the contract. Subsequent events that caused the agreement to result in significant losses to the SABC were still under investigation.
A new contract between the SABC and Multichoice had been entered into with effect from 1 September 2017 for a period of five years. The investigation of this contract fell outside of scope of the proclamation and the evidence obtained did not justify an application for a new proclamation to investigate the contract.
Phase 2 Investigations
The following matters were being investigated in Phase 2 involving The New Age (TNA), the SABC security tender, the irregular appointments of seven SABC officials, the irregular payment of bonuses such as the 13th cheques to senior managers, and the R31 million paid for the R10 000 to each of the 3 124 staff.
Under irregular expenditure, a R5 million South African Revenue Service (SARS) penalty, as well as the validity of a sample of tax clearance certificates, including conflicts of interest, were being investigated.
It also included past payments of R2.4 million paid 53 artists, the SABC Heritage/Thank you Concert that cost about R27 million, Rapid Blue X Factor Season 1, irregularities regarding the lease of the SABC office in Nelspruit, irregular payment of Mr Motsoeneng's R1.2 million in legal fees, and allegations at the North West SABC office involving the appointments of the provincial general manager, the provisional news editor, officials doing business with the SABC, and corruption and abuse of SABC resources.
There had been referrals to date for civil litigation under Phase 2 against TNA Media for the amount of R144.5 million, with Case No 18/16696, pending an application by the SIU to be joined as party to SABCs application to have the contract reviewed and set aside.
The second referral was that of the SABC security contract to the value of R194 million. The SIU had been joined as a party to have the contract reviewed and set aside.
The TNA Breakfast
This contract entitled TNA to sponsorships of exorbitant amounts from state entities and government departments, which enabled them to stage a "Breakfast Show", which the SABC was due to broadcast in terms of the contract. TNA had initiated arbitration proceedings against the SABC in terms of losses of R144 551 76.16 allegedly suffered due to the SABC 's repudiation of a renewal agreement between the SABC and TNA.
As a result and with a view to defend the claim, the SABC had bought an applicatiion to have the contract reviewed and set aside. The SIU had filed an application to join the proceedings with a view to providing supporting evidence to the SABC's application. The matter had been delayed due to the fact that TNA had been liquidated, and the fact that the (final) liquidator who decides which claims he/she wished to pursued (if any) had still not been appointed by the Master of the High Court.
SABC Security Contract
The SIU had finalised the investigation into the awarding of the SABC security contract valued at R185 519 425.67, as well as the allegations of corruption. In this investigation it had been uncovered that the contract had been awarded irregularly and that financial misconduct had occurred in contravention of section 86(3) of the PFMA, and contravention of section 28 of the PFMA for failing to act in the best interest of the SABC.
The SIU had referred the disciplinary referral on 16 May 2019, and the criminal referral for the contravention of the PFMA on 6 May 2019.
As part of the overall SIU investigations, the evidence and findings of all the individual investigations were being collated and considered with a view to pursuing potential actions and remedies against board members and exevutive directors of the SABC provided for in legislation such as the Companies Act of 2008 and the Prevention and Combatting of Corrupt Activities Act. The actions being considered include criminal action and taking steps such as having former SABC board members declared delinquent directors as provided for in section 162 of the Companies Act.
The SIU had also considered remedial action against individuals where governance failures had occurred and reporting requirements had not been implemented.
The Chairperson thanked the SIU for the presentation, and requested the SABC to provide feedback first.
Mr Bongumusa Makhathini, Chairperson: SABC, said the presentation had covered everything that the corporation had prioritised, and that it had since also instituted consequence management.
The SABC was committed to recovering the stolen money and would address the governance issues and the binding remedial action, as stipulated by the Public Protector in 2014, would be implemented. He referred the ad hoc committee’s findings, as well as those of the Auditor General of South Africa (AGSA) and the SIU input, and said that in the last financial year, the SABC had conducted 180 internal forensic audits.
He told the Committee that there was currently a smear campaign against SABC board members and senior executives as a result of the on-going investigations into the illegal activities at the SABC, and that there had been active assassination attempts against officials who were working on cleaning up the rot. This had become part of the strategic turnaround to deal with all the issues of corruption.
There were employees who had done their work with diligence, and the SABC owed it to them to address the challenges. A lot of these matters were the result of historical messes.
He called upon Adv Ntuthuzelo Vanara, the SABC's Head of Legal Services, to provide a briefing on legal issues.
The Chairperson asked whether there would be a completely new presentation, and Adv Vanara replied that he would be "piggybacking" on the SIU’s presentation.
He referred to page to page 8 of the SIU report, and said that two weeks ago there was a meeting with the SIU to discuss the last sentence that read: "the SIU found no evidence to support the allegations of irregularities regarding the appointments of other officials". The SABC had met with the SIU because the investigation reports had indicated that they were not irregularly appointed, while in the SABC’s view some of these officials had been irregularly appointed.
Mr B Radebe (ANC) interjected, saying the SIU had its own report and the SABC was now presenting its own report, and it seemed that there was no synergy.
Adv Vanara replied that it was natural that during investigations like these that there might be misunderstandings. However, the SABC respected the outcome of the SIU report.
The Chairperson objected, and said that the SABC could not be allowed to respond to the presentation by the SIU.
Adv Vanara added that the presentation by the SIU was the very same presentation endorsed by the SABC. With regard to slide 12, the SABC had not appealed the judgments -- not because it did not agree, but due to financial constraints.
Regarding Vision View productions, the SABC would like to confirm on record that it had started utilising the studio from 1 April. Prior to the legal dispute arising, it had paid R34 million, and after the judgment that had been delivered on the matter, it had sought to engage Vision View. However this had failed, so the SABC was appealing that judgment on the basis that it needed clarity on whether it should pay, and what the just amount would be.
Regarding Gekko, that the SIU and the SABC were not the same applicants. The SABC had consciously decided not to appeal this matter as in its view, it was irregular had to be set aside.
Reference had been made to interdicting or freezing pension funds. There were currently plans under consideration to freeze pension funds, and it was being urged to use its discretion, without a court order, to withhold the pension benefits. In some instances, assistance had been welcomed, but in others, the legal route had to be followed.
The Chairperson wanted to know how sustainable this arrangement with the pension fund was.
The SABC, in conjunction with the SIU, had interdicted Ms Raphela’s pension payout. There had been no contradiction there. There were other similar cases and there was a need to get a similar arrangement. It was a legal discretion. The pension fund could legally exercise its discretion as to which one had to go to court.
Mr Jonathan Thekiso, Group Executive :Human Resources, confirmed the consequence management route that had been taken, and said that where the SABC had had to interdict retirement benefits of employees in addition to the cases the SIU recommended for disciplinary action, the SABC had concurred. There had been about nine matters that had been proceeded with, where the employees had either resigned, been dismissed or given a final written warning.
Ms B van Minnen (DA) wanted to know how the special tribunal had been put together, and what its powers and jurisdiction were, and why the matters would not be heard in a civil court.
Ms T Marawu (ANC) said that she was quite impressed by the SIU presentation, and commended the SABC for taking on the rampant corruption. She was impressed with the progress and that she wanted to invite the SABC to take the public into its confidence. The SIU should be louder about the good work that they were doing. She was also impressed with the various government departments working together, as well as with the establishment of the tribunal.
The SABC had to convince SCOPA of the strength of their internal forensic capabilities, especially since the SIU was also investigating the same matters.
She said that assassinations and threats against executives had to be taken seriously and addressed. She also lamented the lack of female representatives among the SABC staff.
Mr B Hadebe (ANC) said he was interested to learn how many appointments had been found that were not considered as irregular against the background of some employees feeling that they might be targeted, which was creating a toxic environment. He wanted to ascertain whether all ten matters on slide 19 had not yet been charged since the SIU made the allegations. This was based on the SIU's admission that these matters were deemed important, and should thus be charged as well. In relation to slide 12, he was interested in finding out on what basis the case had been dismissed.
Mr S Somyo (ANC) said that he wanted to check whether these were the other disciplinary charges, and whether the basis for the investigations had been as a result of a proclamation in 2017 and 2018, especially regarding the security contract. The board chairperson had referred to them as "legacy issues". He wanted more information on this security contract from the SABC board, and what their initial take on the matter was. In the matter of Multichoice, the SIU had taken note of the reason that the contract had lapsed, and had thus seen no reason to pursue legal action.
Ms B Swarts (ANC) wanted to know how much money the SABC had received after Aguma and Lornavision had got their cut, and whether Lornavision and Aguma had objected to the motion. She also wanted to know why the SABC did not have this facility in-house.
She called upon the SABC to provide the Committee with background information on the 180 internal forensic investigations currently under way. She questioned why the SABC was doing it on their own when they already had a viable relationship with the SIU. Regarding the upfront payment of R 20 million to one of the companies, she said that it was worrisome that upfront payments could be made without work being done and wanted to ascertain how many executives had signing privileges on amounts that big. Was there a policy that allowed for such upfront payments?
Mr R Lees (DA) said that it was encouraging to see the progress made, and wanted to ascertain why it had been necessary to have an MoU with the NPA and approach the various courts across the country. He would be interested to know how many of the disciplinary cases the SABC had been dealing with had been lost, and why they were lost. He also wanted clarity on what the real the issue with Vision View was.
He acknowledged the work that had been described in the presentation about recovering losses, but he was also interested in the current operations as they related to licensing fees. In addition, and more importantly, he wanted to know what the SABC was doing to cut operational costs. The SABC was asked whether it was pursuing an increase in license fees, to offset having to ask National Treasury for a bail-out in future.
Mr M Dirks (ANC) thanked the SIU for the presentation and the cooperation that it had given to SCOPA. He recalled that about two weeks ago, when Steinhoff, the Hawks and the NPA appeared before SCOPA, it had been evident that the NPA did not want to proceed with prosecution, and SCOPA had had serious issues with this.
In the matter related to Mr Motsoeneng on page 11, reference had been made about a counter claim by Mr Motsoeneng. Did this relate in any way to assertions made by Mr Motsoeneng at the State Capture Commisison that money was owed to him by the SABC?
He questioned whether it was wise to pursue certain civil cases when the legal costs incurred outweighed the potential amount recovered. He also asked why the SABC made use of Werksman Attorneys, as this same law firm seemed to have captured the government -- it did a lot of business with government and even senior politicians. He wanted to know whether the SABC had a pool of lawyers to choose from, and whether this was adequately captured in the supply chain processes.
Adv Mothiba said the Special Tribunals Act had resulted in the creation of the SIU. The Special Tribunal was established in 2000, but had ceased to operate at some point as a result of the legal challenges around jurisdiction and technicalities. It had really ceased to operate for well over ten years.
When the SIU embarked on the new strategy that aimed to investigate all the cases involving alleged corruption and recover money speedily, it had realised that there was R14.7 billion on the books to be recovered. It was also realised that because cases were delayed, it would be necessary to resuscitate the Tribunal.
The SIU had gone through the various processes that had led to the President issuing a proclamation, and judges had been appointed. Its jurisdiction was that of a high court, but there were rules and regulations that still needed to be published to regulate the processes of the Tribunal.
The SIU should take the public on board, and in this regard there should be an awareness campaign to promote the combatting of corrupt practices. In some countries, awareness campaigns were also taken to schools, and this should also be duplicated in South Africa.
The SIU took the protection of witnesses very seriously and had in the past used the witness protection programme. The SABC had raised the issue of those who had not been charged, and should the SIU be persuaded, it would definitely look into the matter. All the other ten cases had been referred to the NPA, with only one person having been prosecuted.
Adv Jerome Wells, Chief Legal Counsel at the SIU, added that the counter claim by Mr Motsoeneng amounted to R16 million, and the SIU would assess this and respond appropriately. The SIU held the view that Mr Motsoeneng was not entitled to this additional "success fee" in any event.
The Chairperson commented that Mr Motsoeneng's name would come up continuously during the discussion, and called upon the SABC to address this issue in its entirety.
Adv Wells added that there was no objection to the filing of the amendment, and that it had been filed.
Adv Mothibi said that the defendant had requested a postponement due to the unavailability of legal counsel during pre-trial proceedings, so the matter would be heard on 26 September.
The evidence that the SIU had uncovered pointed towards unlawful behaviour in the awarding of the security contract.
In respect of Multichoice, the SIU had also taken into account the losses the SABC had suffered, and the team would definitely consider whether action needed to be taken against Multichoice.
The value of the upfront payment had been R4 million. The R20 million referred to page 17 of the slide essentially had to do with legal fees. The SIU was concerned with the manner in which the upfront payment had been authorised, as it went against the PFMA.
Adv Mothibi referred to the MoU concluded with the NPA in August 2017, and said that at the crux of the arrangement stood a burning desire to understand the status of the matters that had been referred to the NPA. It had been important to ensure that all referrals were processed to the NPA, as there had been instances where matters had been forwarded to the Hawks or the NPA directly. South African law required that the SIU refer cases to the NPA. The MoU also provided a mechanism structure that managed the progress of cases, and also how to deal with the referral mechanism.
The reason for approaching the benches across the country was that there was a mechanism that could be used, available for any litigation, to approach the bench for case management that dealt with the technicalities, so that the trial was not delayed. The freezing of the pensions, together with the SABC, had initiated such action. This had been the first time it was being pursued through the courts, and was in response to new ideas brought forward.
In the new value chain, a new function had been created at the SIU that would deal with the follow-ups on all referrals. The team would go to state institutions to review whether recommendations had been implemented.
Mr Makhathini, responding on behalf of the SABC, noted the comments on the lack of diversity of the SABC delegation, and indicated that this was a result of cost considerations, the type of expertise needed to address particular issues, and the availability of officials.
He said that the security contract tender had been approved by the interim board, and the new board that included members from the interim board had reached consensus that the matter had to be referred to the SIU through the second proclamation. The SIU had provided the board with a final report, and the board had agreed with the SIU’s recommendation that the contract had to be set aside as it had been unlawfully awarded.
Mr Madoda Mxakwe, SABC Group Chief Executive Officer, said that past issues of corrupt governance were being counter balanced by a new culture of good governance. It would take a while, as the SABC was dealing with legal issues. The 180 cases dated back to 2012 and they had been unattended and deliberately neglected.
The question as to who signed off on payment requests depended on the procurement of services or goods, revenue generation issues or investment. General managers could approve up to R10 million, group executives up to R50 million, and the Group Executive Committee (Exco) up to R 60 million, and the board the board up to R100 million.
He added that the SABC paid the standard commission fee of 25% to debt-collecting companies to to collect television licence fees on its behalf. In addition to this, the SABC also had its own internal system of collecting TV licence revenue. In order to boost revenues, over and above income from commercials, the SABC had diversified its income streams and introduced merchandising, and had spoken to the government for additional advertising opportunities and eventing.
The SABC had instituted cost cutting measures, resulting in losses that stood at R1 billion being reduced to R622 million.
In respect of the freelancers, Mr Mxakwe said that of a staff complement of 5 500 employees, 2 000 were freelances. He added that news crews were sent out to different and sometimes far flung areas, and due to logistical issues the content might not be aired. However, this did not mean the content was lost, as it was added to the SABC archives.
Sports rights had been one of the biggest cost drivers at the SABC, and this had become difficult for the SABC. Although it was committed to the public mandate of broadcasting sport for the public it just could not afford to do so.
The Chairperson thanked the SABC and the SIU for their attendance.
The meeting was adjourned.